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=DJ IN THE MONEY: Elgindy Case Broadened With New Arraignment
By Carol S. Remond
A Dow Jones Newswires Column
NEW YORK (Dow Jones)--A federal indictment against notorious stock
market player Anthony Elgindy and four others broadened Monday with
the arraignment of Robert Hansen on conspiracy charges.
Hansen managed Elgindy's Web sites and was also in charge of billing
the sites' subscribers.
In a racketeering indictment unsealed in Brooklyn, N.Y., last May,
federal prosecutors alleged that Elgindy, with the help of Federal
Bureau of Investigation agents Jeffrey Royer and Lynn Wingate, used
confidential FBI databases to guide short-selling strategies.
Elgindy is also charged with extorting executives of small firms and
manipulating their stock prices.
Also charged in the case are Troy Peters and Derrick Cleveland, who
according to the government's indictment, assisted Elgindy in
committing securities fraud.
Hansen was arraigned Monday through a complaint on charges of
conspiracy. The government now has 30 days within which to indict him.
A lawyer representing Hansen was not immediately available.
According to the complaint, Hansen "participated in a conspiracy to
commit illegal insider trading and market manipulation."
The complaint also alleges that Hansen "participated in the
conspiracy principally as the 'webmaster' of internet sites used to
disseminate unlawfully obtained non-public information and false and
misleading information. The dissemination of this information made it
possible for members of the conspiracy, including Hansen, to reap
illegal profits from the purchase and sale of securities."
So far, only one of the five original defendants pleaded guilty in
the case. Cleveland pleaded guilty to racketeering conspiracy in July
and is now cooperating with the government.
In recent weeks, Brooklyn Assistant U.S. Attorney Kenneth Breen
looks to have ramped up his inquiry into the Elgindy case. According
to people familiar with the matter, a number of new subpoenas were
issued to former subscribers of Elgindy's Web sites.
According to a subpoena obtained by Dow Jones Newswires, the
government is looking for a wide range of information about Elgindy's
Web sites, InsideTruth.com and AnthonyPacific.com, including chat
logs, correspondence, consulting agreements and Internet bulletin
board postings.
The federal government also appears to be focusing its attention on
three former subscribers of Elgindy's sites, including Hansen. The
subpoena obtained by Dow Jones shows that the Brooklyn U.S. Attorney's
office is looking for information about Hansen and two other
individuals, in addition to the five defendants charged last May.
Hansen was the only new person relating to the Elgindy case
arraigned Monday.
Finally, the U.S. government seems to be investigating any
connection between Elgindy and Imclone Systems Inc. (IMCL).
ImClone became embroiled in an insider trading scandal last December
after the company's chief executive sold shares ahead of a crucial
announcement relating to one of the company's cancer drugs.
ImClone wasn't mentioned by name in the original indictment. But the
indictment said that FBI agent Wingate did log into an FBI database to
check on the chief executive of a Nasdaq-listed company on March 4,
2002 while working at the Albuquerque, N.M., FBI office. Wingate is
accused of tapping into confidential government databases to help her
former boyfriend Royer after he left the bureau in late 2002.
A person with knowledge of the matter said Royer had taken an
interest in ImClone while working from Elgindy's office in San Diego
in the months before his arrest.
-By Carol S. Remond; Dow Jones Newswires; 201-938-2074;
carol.remond@dowjones.com.
(END) Dow Jones Newswires
03-24-03 1736ET
- - 05 36 PM EST 03-24-03
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